Should I have refinance or not???

[Anonymous]

Hey all! On Friday we refinanced our car that we've had for 4 yrs to lower the payments. We ended up with a 1.99% interest rate! ❤😘❤ Yaaayyy!! It dropped our payments well over $100/ mnth.

Now my dilemma is our car was our oldest tradeline (no lates or anything negative) so with us refinancing our AAoA will drop drastically. We have other positive accts that were satisfactory and paid off and all the other positive tradelines were from this year.

How much of a decrease should I expect our scores to drop? Both of our scores are 680 ish?

[RobertEG]

The effect on your AAoA will not result from the prior loan, but from the new loan.

Closed, paid accounts continue (at least under FICO scoring) to be included in your AAoA.

It is the addition of the new account with an initial age of zero that is impacting yur AAoA.

Closed accounts will reman in your report for approx ten years after closing date, when the CRA may delete as a housecleaning measure.

The peril with closed accounts, however, is that the creditor may decide to exercise their own housecleaing, and ddelte the account once it is closed.

That removes the account from any possible future disputes of anything reported under the account.

[Anonymous]

@RobertEG Thanks for the insight. We were previously with GM Financial and they report up to 10 yrs after the close date. I was just confused since all of our open accts now are all under 1 yr old. Im thinking that'll impact our scores somewhat.

[Anonymous]

I wouldn't worry about the short term hit. When I refinanced, I took a couple points hit and it rebounded a couple months later. What's important is that you have that interest rate low!

[Anonymous]

The whole point of building your scores is so you can get advantageous interest rates on large purchases. You have just done that. Any temporary effect on scores is "paid for" by the $100 a month you are saving.